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December 2016

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Tokyo is the world’s hottest market for retail expansion, attracting 63 new brands last year as leasing momentum in core areas remained strong, despite mixed signals in the economy and an increase in the sales tax to eight per cent in April 2014, according to the latest report from CBRE Group, Inc., “How Global is the Business of Retail?” Toronto was the hottest market in the Americas, attracting 25 new international brands in 2014.

According to the report - which tracks the target markets of new brands in 164 cities in 50 countries - US retailers are the most active when it comes to expanding into new global markets. In 2014, US retailers accounted for 26 per cent of cross-border expansion. Primary expansion targets for America’s retailers are Asia (41 per cent), Europe (33 per cent), and the Middle East and Africa (12 per cent).

Italian retailers were the second most active, accounting for 14 per cent of cross-border expansion, followed by UK-based retailers (11 per cent) and French retailers (10 per cent). Globally, Europe accounted for 42 per cent of retailer expansion, followed by Asia with 39 per cent and the Middle East and Africa with 10 per cent. North America was only a target for three per cent of retailers.

“The core elements of globalization, technology and demographic change, continue to have a dramatic impact on the business of retail. Demographic shifts in many countries have resulted in changes in both spending power and shopping habits. Technology enables retailers to enter markets and evaluate performance more swiftly,” said Brandon Famous, senior managing director, retail occupier advisory & transaction services, CBRE. “Consumer traveling patterns mean that many brands are well known before they even enter a market and the pent-up demand for the chance to purchase locally creates a ready-made market before entry.”

Among the most active retail sectors globally, mid-range fashion retailers led the field, accounting for 21 per cent of global expansion, followed luxury and business retailers, with 20 per cent, and coffee and restaurant and specialist clothing, each with 16 per cent. When it comes to expansion into the Americas, luxury and business retailers were the most active at 26 per cent, followed by mid-range fashion representing 20 per cent of total activity, and specialist clothing representing 14 per cent.

“Consumers continue to view the physical store as their preferred mode of purchase and perhaps more importantly, as a point of social interaction,” Famous added. “Consumers view shopping as a leisure activity and the continued expansion of brands and the development/improvement of shopping locations gives them the opportunity to embrace this.” (SH)